BNP PARIBAS MALAYSIA BERHAD BOARD CHARTER - March 2021 - Page 1 of 12
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March 2021
BNP PARIBAS MALAYSIA BERHAD
BOARD CHARTER
Page 1 of 12DEFINITIONS
The following definitions (in alphabetical order) shall apply throughout this Board Charter:
Act : Companies Act 2016, as amended from time to time
APAC CG Manual : APAC Corporate Governance Manual and Directors’
Guidelines for Operating Subsidiaries
Articles : Articles of Association of BNPP Malaysia Berhad
Board : Board of Directors of BNPP Malaysia Berhad
BNM : Bank Negara Malaysia
BNM CG Policy : BNM Corporate Governance Policy
BNPP Malaysia Bhd or the Bank : BNP Paribas Malaysia Berhad
Registration No. 201001034168 (918091-T)
CEO : Chief Executive Officer of BNPP Malaysia Berhad
FSA : Financial Services Act 2013, as amended from time to time
Page 2 of 121. Introduction
1.1 The Board Charter outlines the roles and responsibilities that the Board and those delegated to
Board Committees of BNPP Malaysia Bhd.
1.2 This Board Charter is prepared in accordance with the following:
(i) BNM CG Policy;
(ii) APAC CG Manual;
(iii) The Articles;
(iv) The Act; and
(v) Any other applicable laws, guidelines, or regulatory requirements, where applicable.
2. Board Balance & Composition
2.1 In accordance with the Articles, the Board shall consist of a Chairman and comprise a minimum
of not less than three (3) Directors. Any permanent appointed Chairman of the Board should
preferably be appointed by the shareholder of the Bank in accordance with the requirement of
the APAC CG Manual.
2.2 The Board shall comprise a majority of Independent Non-Executive Directors at all times.
2.3 The Directors should have the relevant experience to perform their role, in light of the activities of
the Bank, be of the highest integrity and meet any requirements as to fitness and propriety,
imposed by the regulators.
The criteria and skill sets required by the Directors, individually and collectively, are documented
which reflects the fit and proper requirements; and specific market and/or business knowledge
required by the Board.
2.4 The main functions of the Chairman and CEO are clearly defined and delineated so as to ensure
an appropriate balance of authority, increased accountability, and an enhanced capacity for
independent oversight and decision making by the Board:
Chairman CEO
• Holds a non-executive position. • Is not a member of the Board, attends
• Provides leadership to the Board in its Board meetings on a permanent invitee
oversight of management and in its basis.
stewardship of the Bank. • Oversees the day-to-day management and
• Presides over all Board meetings and running of the Bank.
ensure smooth and effective functioning of • Implementation of the Board’s decisions
the Board. and policies and accountable to the Board.
Page 3 of 123. Roles & Responsibilities of the Board
3.1 Roles and Responsibilities of the Board
(a) Approve risk appetite, business plans and other initiatives which would, singularly or
cumulatively, have a material impact on the bank’s risk profile, including initiatives which
affect the financial soundness, reputation or key operational controls of the Bank;
(b) Oversee the selection, performance, remuneration and succession plans of the CEO and
senior officers, such that the Board is satisfied with the collective competence of
Management to effectively lead the operations of the Bank;
(c) Oversee the implementation of the Bank’s governance framework and internal control
framework, and periodically review whether these remain appropriate in light of material
changes to the size, nature and complexity of the Bank’s operations;
(d) Promote, together with senior management, a sound corporate culture within the Bank
which reinforces ethical, prudent and professional behaviour;
(e) Promote sustainability through appropriate environmental, social and governance
considerations in the Bank’s business strategies;
(f) Oversee and approve the recovery and resolution as well as business continuity plans for
the Bank to restore its financial strength, and maintain or preserve critical operations and
critical services when it comes under stress;
(g) Promote timely and effective communication between the Bank and BNM on matters
affecting or that may affect the safety and soundness of the Bank; and
(h) Oversees material compliance breach and incident by staff including Management, if any.
3.1.1 The Board is accountable to the shareholder for the Bank’s governance and overall performance.
3.2 Chairman of the Board
3.2.1 In accordance with the APAC CG Manual, a permanent Chairman of the Board should be
preferably appointed by the shareholder of the Bank.
3.2.2 The Chairman of the Board must not be an executive position, and must not have served
as a CEO for the past five (5) years.
3.2.3 The Chairman shall:
(a) Ensure that appropriate procedures are in place to govern the Board’s operation.
(b) Ensure that decisions are taken on a sound and well-informed basis, including by
ensuring that all strategic and critical issues are considered by the Board, and that
the Directors receive the relevant information on a timely basis.
(c) Encourage healthy discussion and dissenting views can be freely expressed and
discussed.
(d) Lead efforts to address the Board’s development needs.
Page 4 of 123.3 CEO
3.3.1 The CEO, in leading Management, bears primary responsibility over day-to-day
management of the Bank.
3.3.2 The CEO must:
(a) Not be disqualified under section 59(1) of the FSA and have been assessed to have
complied with the fit and proper requirements.
(b) Not a substantial shareholder of the Bank.
(c) Devote the whole of his / her professional time to the service of the Bank.
3.4 Individual Directors
3.4.1 Each Directors of the Bank are required to discharge their fiduciary responsibilities of
which these include, but not limited to the following:
(a) Act in good faith and in the best interest of the Bank.
(b) Exercise reasonable care, skill and due diligence including business judgment rule.
(c) Avoid conflict of interest in a personal or professional capacity.
(d) Disclose of and abstain from voting on matters concerning material interest in a
personal or professional capacity.
3.5 Independent Directors
3.5.1 The Independent Directors of the Bank are independent in character and judgement, and
free from associations or circumstances that may impair the exercise of his / her
independent judgement.
3.5.2 The tenure limit for Independent Directors of the Bank should generally not exceed nine
(9) years on a cumulative basis, except under exceptional circumstances or as part of
transitional arrangements towards full implementation of succession plans of the Bank.
3.5.3 An Independent Director of the Bank must immediately disclose to the Board of any
changes in his / her circumstances that may affect his / her status as an Independent
Director.
4. Appointment & Re-appointment to the Board
4.1 The Nomination Committee (“NC”) is responsible for recommending any new appointments of
Directors to the Board and Board Committees. The NC evaluates the qualifications and
experience of each director candidate and recommends any duly qualified director candidates to
the full Board for its evaluation and recommendation to the shareholder for approval.
4.2 In its evaluation of individual director candidates, the NC / Board shall consider the Board size
and composition in terms of having an optimal mix of experience/expertise and shall adhere to
all relevant internal BNP Paribas Group guidelines and BNM CG Policy.
4.3 The Bank has voluntarily not set specific minimum age, education, years of business experience
or specific types of skills for Board members, but, in general, expects a candidate to have a solid
and stable track record with achievements in business, education, professions, financial or other
relevant sectors. They must have the requisite integrity, values, education and experience to
make significant contributions to the deliberations of the Board and its stewardship of the Bank.
Page 5 of 125. Matters Reserved for the Board
5.1 The matters reserved for the Board include but not limited to the following:
(a) Strategic plans;
(b) Annual business plan;
(c) Risk Appetite Statement;
(d) Approval of all major policies for managing main categories of risk, including credit, market,
liquidity, operational risk and other initiatives which could have material impact on the
Bank’s risk profile;
(e) Change of composition of Board Committees;
(f) Appointment and re-appointment of Directors (also subject to shareholder’s approval);
(g) Appointment of CEO and senior officers; and determination of remuneration of CEO and
senior officers;
(h) Oversight of appropriate internal control mechanisms are in place and are being
implemented in accordance with the Act and regulatory requirements; and
(i) Audited financial statements including Directors’ Report and Statement on Corporate
Governance.
6. Board Meetings
6.1 Frequency
6.1.1 The Board shall meet at each quarter in a calendar year, with additional or special
meetings as and when required, as stated in the Terms of Reference of the Board.
6.2 Notice and Agenda
6.2.1 In accordance with the Articles, a meeting of the Directors shall be called by not
less than three (3) days’ notice in writing.
6.2.2 The Chairman together with either the CEO or CRO-Head of Risk & Governance or the
Company Secretary shall have pre-discussions on agenda items prior to Board
meetings.
6.3 Quorum
6.3.1 In accordance with the Articles, at the commencement of Board meetings, the quorum
shall be at least half of the Board members. The quorum necessary for the transaction of
business of the Directors shall be not less than two (2).
6.3.2 In the event the permanent Chairman of the Board is not present during Board meetings
and in accordance with the Articles, the Board shall elect one of its members to be the
Chairman and determine the period he/she is to hold office; but if no such Chairman is
elected, of if at any meeting the Chairman be not present at the time appointed for holding
the same, the Directors present may choose one of their number to be Chairman of the
meeting.
Page 6 of 126.4 Mode of Meeting
6.4.1 Attendance at quarterly Board meetings, by way other than physical presence, remains
the exception rather than the norm.
6.4.2 In accordance with the Articles, a resolution in writing signed by all Directors shall
be effective for all purposes as a resolution of the Directors passed at a meeting
duly convened, held and constituted. A resolution in writing, signed by a Director
and transmitted to the Bank by electronic mail, facsimiles or other written
electronic communications shall be deemed a document signed by him / her.
6.5 Voting
6.5.1 All resolutions tabled at Board meetings shall be by way of a majority of votes i.e.
each Director having one vote. In the case of an equality of votes, the Chairman of
the Board shall have a second or casting vote.
6.5.2 A Director shall not be entitled to vote as a Director in respect of any contract or
arrangement in which he / she is interested and he / she shall not be taken into account
in determining the quorum for the meeting at which any such contract or arrangement is
to be considered.
6.6 Minutes
6.6.1 The minutes of all meetings of the Board shall be entered and kept in the minutes book
and signed by the Chairman of the meeting.
Page 7 of 127. Board Committees
7.1 The Board has established Committees to oversee major functional areas and to address matters,
which require detailed review or in-depth consideration. The main objectives of the Board
Committees of the Bank are:
(a) Board Risk Management Committee
• To ensure that the risk management policies, process and risk management framework
are in place and functioning and to support the Board in meeting the requirements as
set out in the Risk Governance policy of BNM.
• To assist the Board / Board Remuneration Committee in the implementation of a sound
remuneration system, by examining whether incentives provided by the remuneration
system takes into consideration risks, capital, liquidity and the likelihood and timing of
earnings.
(b) Board Technology Risk Committee
• To support the Board in meeting the expectations and management of technology risks
emanating from the use of Information & Communication Technology (ICT) as set out
in the Risk Management in Technology policy of BNM.
• To oversee Management’s activities in managing ICT risk and other ancillary risks in
ensuring key technology risks and critical technology operations including IT risk
management policies, processes and risk management framework are in place and
functioning.
• To review Management’s annual assurance on controls in protecting customer
information and outsourced providers in fulfilling their obligations in accordance with the
contract provisions on safeguarding customer information.
(c) Audit Committee
• To provide independent oversight of BNPP Malaysia Bhd’s internal and external audit
function, financial reporting, internal control system and ensuring checks and balances
within the Bank.
• To perform the oversight function over Management who shall be responsible for
establishing and enforcing controls over procedures and processes.
• To review the accuracy and adequacy of the Report of the Directors, corporate
governance disclosures, audited financial statements and other ancillary matters
concerning financial positions of the Bank.
• To monitor compliance on conflict of interests encountered by the Board, if any.
• To review on all related / connected party transactions.
• To review third-party opinions on the design and effectiveness of the Bank’s internal
control framework, where relevant.
Page 8 of 12(d) Nomination Committee
• To provide a formal and transparent procedure for the appointment of Directors, CEO
and Senior Officers of the Bank.
• To assess the effectiveness of individual Directors, Board as a whole and performance
of CEO and Senior Officers of the Bank.
• To conduct Fit and proper assessments on appointment and on continuing basis.
• To perform annual assessments of Directors, Senior Management and Senior Officers
on the minimum requirements set out in 10.2 to 10.5 (for Directors), 17.2 to 17.4 (for
Senior Management) and 17.2 (for Senior Officers) of the BNM CG policy.
• To ensure there is a sufficient succession planning and human development focus in
the Bank.
• To conduct Board, Board Committees and Individual Directors’ evaluation on an annual
basis.
(e) Remuneration Committee
• To provide a formal and transparent procedure for developing remuneration policy for
Directors, CEO, Senior Officers and employees of the Bank and periodically review the
remuneration of the mentioned personnel.
• To ensure that compensation is competitive and consistent with the Bank’s culture,
objectives and strategy.
7.2 The Board Committees have their respective Terms of Reference.
7.3 The Board remains fully accountable for any authority delegated to the Board Committees.
7.4 The Board shall determine and review the composition of the Board Committees, as and when
required.
Page 9 of 128. Shariah Committee
8.1 The Shariah Committee (“SC”) was established in line with BNM’s Shariah Governance
Framework for Islamic Financial Institutions (“BNM/RH/GL_012_3”). During 2019, BNM issued a
new Shariah Governance policy which came into effect on 1 April 2020 and superceded the
earlier framework. The SC provides an oversight on Shariah matters related to the Bank’s overall
Islamic business activities in ensuring the Islamic banking products and services offered by the
Bank and the relevant documentations are in compliance with Shariah principles at all times.
8.2 The new policy places greater emphasis on the oversight responsibilities of the Board relating to
decisions made by the SC. In this regard, the Board had, in its meeting held in February 2020
resolved and elected a Board member to sit in the SC as a permanent invitee with effect from 1
April 2020.
8.3 The SC reports to / updates the Board at regular sittings of the Board and provide updates on
Shariah related matters, where needed.
8.4 In addition, all appointments including reappointments and removal shall be endorsed by the NC
and thereafter, recommended to the Board for approval. The resignation of the SC members
shall be tabled and accepted by the Board.
9. Board Evaluations, Fit & Proper Assessment
9.1 The Board, through the NC, carries out Board evaluations annually to objectively assess the
performance and effectiveness of the Board, Board Committees and Individual Directors.
9.2 The NC establishes a set of criteria for the assessment of all Directors with attention given to the
principles and skill sets required for the Bank. The set of criteria would be reviewed periodically
to maintain their relevance.
9.3 The NC also holds the responsibility of conducting Fit & Proper assessment as required by BNM
CG Policy. The assessment is done concurrently with the Board evaluations on an annual basis.
9.4 The NC will conduct the Fit & Proper assessment in the event of any new appointment or re-
appointment of Directors.
Page 10 of 1210. Directors’ Training and Ongoing Development,
Induction Programme
10.1 The Bank has dedicated sufficient resources toward the ongoing development of the Directors to
ensure that each Director possesses the knowledge and skills necessary to fulfil their
responsibilities.
10.2 The Bank organises internal training programmes, with collaboration with external consultants or
internal parties, from time to time for the Directors.
10.3 In accordance with BNM’s requirement, all newly appointed directors will be required to complete
FIDE Core Programme (Modules A and B) within one (1) year of their respective appointment.
The Bank shall abide with BNM requirements, as amended from time to time, with regard to
training and development of Directors for financial institutions in Malaysia.
10.4 For newly appointed Directors, an induction programme will be done to enable the new Director
to familiarise himself/herself with all Business Lines, Coverage and Support Functions of BNPP
Malaysia Bhd.
11. Conflict of Interest
11.1 A Director who is, any way whether directly or indirectly, interested in a contract or proposed
contract with the Bank shall declare the nature of his / her interest. The Director that has a
material interest in a matter that relates to the Bank or within the Group will give other Directors
notice of such interest.
11.2 The Director shall also not be entitled to vote as a Director in respect of any contract or
arrangement in which he / she is interested and shall not be taken into account in determining
the quorum for the meeting at which any such contract or arrangement is to be considered.
Page 11 of 1212. Company Secretary
12.1 The Board is supported by a suitable, qualified and competent Company Secretary who is
responsible for supporting the effective functioning of the Board and to comply with all statutory
and regulatory requirements.
12.2 The primary responsibilities of the Company Secretary of the Bank include the following:
(i) Ensure Board procedures and applicable rules are observed including all submission
deadlines are adhered to.
(ii) Maintain statutory and corporate secretarial records of the Board and Board Committees.
(iii) Prepare comprehensive and concise minutes of Board and Board Committees’ proceedings.
(iv) Play an active role in implementing ongoing enhancements to the functioning of the Board
and Board Committees and facilitates effective information flows between the Board, Board
Committees and Management.
12.3 The appointment or removal shall be approved by the Board and in the event of a resignation of
Company Secretary, it will be accepted by the Board.
13. Review of Board Charter
13.1 The Board Charter shall be reviewed by the Board at least once in every two years or on a need
basis or in the event of any material evolutions.
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